DGHM AllCap Value ESG

View DGHM’s ESG Principles
DGHM AllCap Value ESG
Team Leader: Donald Porter, CFA
Launch Date: April 1, 2015
THE FIRM
DGHM employs a fundamental, value-driven investment philosophy that focuses specifically on domestic equity across the market capitalization spectrum. Our team
of 10 Sector Specialists combines quantitative tools with rigorous fundamental analysis. These specialists are experts in their fields and utilize a time-tested,
disciplined approach to purchase high quality companies at compelling valuations. We are committed to value creation over the long term. We strive for consistent
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alpha generation, yielding superior risk-adjusted results across our product line. Established in 1982, DGHM currently manages $2.0 billion in assets.
DGHM ALLCAP VALUE ESG PORTFOLIO
DGHM’s AllCap Value ESG portfolio is modeled after the flagship DGHM AllCap Value strategy, introduced in 1983. The investment objective is long-term capital
appreciation achieved through a diversified portfolio of US-listed equity securities. A parallel objective is to further optimize our focus on quality companies through
ESG analysis. All investments are required to satisfy the rigorous quantitative and fundamental analysis applied to DGHM’s legacy products. The fund eliminates
businesses with negative social impacts, including tobacco, gaming, consumer firearms, adult entertainment, and alcohol-related stocks, while seeking to upgrade the
portfolio’s ESG weighted average score. The result is a portfolio of companies that meet both DGHM’s ESG standards and its stringent valuation, financial strength,
and profitability criteria. It is important to note that ESG factors alone will not make a company investable. The fund will comprise approximately 30 to 40 equity
securities above $1 billion in market capitalization with initial and maximum position sizes of 2.5% and 6% of assets, respectively. The fund will remain within a 75% to
125% band of the benchmark sector weight (Russell 3000 Value) and target cash to less than 3% of assets. Agnostic to market capitalization, the portfolio has the
flexibility to invest in the most compelling small, mid, and large cap companies. Investors benefit from one relationship across the market capitalization spectrum.
FUND OBJECTIVES
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COMPETITIVE EDGE
Achieve superior risk-adjusted returns versus the Russell
3000 Value Index
High-conviction portfolio; Active share above 90%
Apply quantitative and fundamental ESG analysis to
existing quality value style
Will not invest in businesses with negative social
impacts, including tobacco, gaming, consumer firearms,
adult entertainment, and alcohol-related stocks
Strategy focuses on generating alpha through stock
selection: no major sector bets, fully invested (targeting
3% cash or lower)
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10 Sector Specialists with over 25 years of
experience on average
Sector-focused fundamental analysis across the
market capitalization spectrum
Proprietary valuation approach utilized since
inception
Integrated ESG analysis and weighted scoring
methodology
Superior expertise trading illiquid small cap positions
Vigilant risk management
KEY COMPONENTS OF ESG SCORES
Environmental Pillar
 Energy efficiency/carbon emissions
 Water intensity
 Raw material sourcing
 Toxic emissions and waste
 Packaging material and waste
 Electronic waste
 Violations
 Opportunities in clean technology
Social Pillar
 Labor management and diversity
 Health and safety standards
 Supply chain labor standards
 Human capital development
 Product safety and quality
 R&D investment
 Privacy and data safety
Governance Pillar
 Board independence
 Qualifications and diversity
 Voting
 Executive compensation
 Ownership
 Accounting transparency
 Business ethics
 Corruption and instability
Dalton, Greiner, Hartman, Maher & Co., LLC | 565 Fifth Avenue, Suite 2101, New York, NY 10017 | Phone: 212-557-2445 | Fax: 212-557-4898 | www.dghm.com
DGHM AllCap Value ESG
PORTFOLIO CHARACTERISTICS
ECONOMIC SECTOR ALLOCATION
DGHM AllCap
Value ESG
Weighted Average Market Cap
$43,433
Enterprise Value/EBITDA
8.7x
Free Cash Flow Yield
5.3%
2014 Estimated P/E
14.7x
5-Year EBITDA ROA (excluding cash)
17.6%
5-Year CAGR EBITDA/SHR
12.4%
Net Debt (Cash) / Total Cap %
14.7%
Active Share (vs. Russell 3000 Value)
90.4%
Consumer
Cyclicals
12.5%
Utilities
8.9%
Tech
6.8%
Cash
2.6%
Financials
29.7%
Non-Cyclicals
14.3%
Industrial
Cyclicals
25.1%
This is supplemental information.
ACTIVE SIZE MANAGEMENT
TOP 10 HOLDINGS
Pfizer Inc.
4.5%
Delta Air Lines, Inc.
3.3%
Wisconsin Energy Corporation
3.3%
JPMorgan Chase & Co.
3.3%
Public Service Enterprise Group Inc
3.3%
Invesco Ltd.
3.0%
Regal Beloit Corporation
3.0%
Lincoln National Corporation
3.0%
Suncor Energy Inc.
2.8%
SunTrust Banks, Inc.
2.8%
Small < $4B
Mid $4B–$25B
Large > $25B
100%
80%
60%
40%
20%
0%
Total % of AllCap Value ESG portfolio
This is supplemental information.
This is supplemental information.
TEAM STRUCTURE
CONTACT INFORMATION
Jeff Baker, CFA
Healthcare, Energy
Bruce Geller, CFA
Capital Goods, Retail
Tim Dalton, CFA
Miscellaneous Financials
David Dusenbury, CFA
Insurance,
Miscellaneous Financials
Peter Gulli, CFA
Banks, Consumer Staples
Industry
Specific
Expertise
Randy Watsek, CFA
Utilities, Consumer Services,
Telecom Services
Doug Chudy, CFA
Basic Materials,
Consumer Durables
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4/1/2015
32.2%
Joshua Waltuch
Technology
Donald Porter, CFA
Business Services, Transport,
Aerospace/Defense
Ed Turville, CFA
(Real Estate Management
Services Group)
Dalton, Greiner, Hartman, Maher & Co., LLC
565 Fifth Avenue, Suite 2101
New York, NY 10017
Main: (212) 557-2445
www.dghm.com
Michael S. Dunn
Vice President
Direct: (212) 400-2230/Mobile: (917)574-5283
Email: [email protected]
Erin A. Gilroy
Vice President
Direct: (212) 557-4996/Mobile: (917) 280-5520
Email: [email protected]
Real Estate
DGHM AUM includes third party platform assets for which DGHM does not have full conditional authority, and which have been excluded from the definition of the firm for GIPS
purposes. The assets consist of direct wrap relationships of $78 million as of March 31, 2015.
Dalton, Greiner, Hartman, Maher & Co., LLC | 565 Fifth Avenue, Suite 2101, New York, NY 10017 | Phone: 212-557-2445 | Fax: 212-557-4898 | www.dghm.com